Monday, 1 June 2015

Starbucks v British Sky Broadcasting 2015 UKSC 31

This is a guest post by Ian Learmonth, following the discussion he lead last week on the case (see further commentary using the hashtag #SandtonDiscussion) especially as it relates to South Africa and other common law jurisdictions heavily influenced by developments in English law.

"This case
considers whether a passing off claim in the United Kingdom requires the
plaintiff to show that it has customers in the territory concerned, or whether
simply having a reputation is sufficient. The plaintiff is the operator of an Internet based
television company in Hong Kong, under the brand NOW TV. The services they
offer require hardware which is not available in the UK and it was common cause
that its core services could not be accessed from the UK. However, a large
number of members of the Chinese speaking community in the UK are aware of the
brand through past exposure while abroad. Some content generated by the
plaintiff was freely available via the plaintiff's website and on YouTube, but
this material is primarily intended to promote its services in Hong Kong.

Now ..,this is Sky (ed\)

The defendant
launched an Internet based television service under the brand NOW. The Court
accepted that the marks were likely to cause confusion, but noted that the
plaintiff, despite having a reputation in the UK, had no customers and
therefore no goodwill. It was held that the existing English common law
required goodwill in the territory. However, the Court was called on to develop
the common law to recognize that reputation could substitute for goodwill in
light of modern communication and business practices.

The Court
conducted a fairly thorough examination of the approach to the requirement of
goodwill in other common law jurisdictions. It noted that in Ireland, New
Zealand and Canada, the requirement for goodwill was still strictly applied. In
Australia and South Africa courts have recognized that reputation alone is
sufficient to support a claim for passing off. In Hong Kong and Singapore
recent jurisprudence has wavered slightly but both have concluded that goodwill
remains a requirement. It should be noted that in Singapore it has been held
that reputation created through a large scale pre-launch marketing campaign may
be sufficient to attract protection on the basis of passing off.

Now ...this is Starbucks (ed)

In reaching
its decision the Court decided that a plaintiff must have customers in a
jurisdiction, who access the service in that jurisdiction; in other words it is
not sufficient for a plaintiff to show that individuals are present in the
jurisdiction who make use of its services outside of the jurisdiction. However,
the Court did recognize that customers who are able to book the services within
the jurisdiction, should be considered as customers, even if the factual use of
the service only occurs outside the jurisdiction.

The Court also
noted that consideration must be given to issues of public policy. It specifically
drew attention to the fact that a balance must be drawn between the public
interest in free competition and the need to protect a trader from unfair
competition. It was acknowledged that where a business has been advertised but
not marketed no benefit has been provided to the public.

In
interpreting the common law, the Court also considered the impact of
legislation which protects foreign well known trade marks. It noted that such
legislation is put in place precisely to protect foreign brands from abuse
where they are not used within a jurisdiction, provided the necessary
requirements are met. The defendant argued that the existence of legislative
(provided certain criteria are met) militates against providing broader common
law protection. The Court noted that this argument had strong force, although
ultimately it was not required to make a decision on this argument.

Ultimately,
the Court held that reputation, in the absence of goodwill in the form of customers,
was not sufficient to sustain a claim of passing off. The Court explicitly left
open the question of whether reputation generated by a marketing campaign in
advance of an imminent business launch would attract protection."

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